FINRA Series 79 Course Notes

Domain 1 is the Series 79 core (49%). Start by identifying the analytical task, then select the most relevant source, filing, financial statement, ratio, valuation method, transaction precedent, financing alternative, or due-diligence workstream. Know the purposes of key Exchange Act filings: 8-K for material events, 10-Q for quarterly financial reporting, 13D/13G for significant ownership, 13F-related institutional holdings reporting, and proxy-related filings. Understand how the balance sheet, income statement, and cash flow statement connect. Use liquidity, profitability, and leverage metrics for the problem actually being tested. For valuation, distinguish enterprise value from equity value, use DCF and appropriate trading/transaction multiples, and recognize WACC as a key DCF discount rate. Precedent transactions, ownership data, financing alternatives, and investor type all depend on transaction context. Due diligence is a material-misstatement/omission exercise: verify the issuer, financials, management, plans, counterparties, sites, and bring-down information. Sell-side diligence supports marketing and execution of a sale; buy-side diligence focuses on acquisition risk and strategic fit. Governance questions center on whether a reasonable investigation was performed.

• Treating every data source as equally authoritative or equally useful.

• Identify the task first, then choose the data source.

Domain 2 (27%) covers underwriting, new financing, public-offering mechanics, registration, exemptions, private placements, and institutional resales. Know the offering-document sequence, preliminary versus final prospectus timing, and how filing/communication obligations change by stage. FINRA Rule 5110 addresses corporate-financing terms; Rule 5121 addresses conflicts of interest in public offerings. Distinguish syndicate agreements and underwriting commitments such as firm commitment and best efforts. Regulation M questions turn on who is acting and during what part of the distribution: Rule 101 focuses on distribution participants, Rule 102 on issuers/selling security holders, with Rules 103-105 covering other offering-period controls in the source notes. Book building tracks investor demand, price sensitivity, and investor quality. Offering size, price, and timing depend on market conditions, competing deals, issuer needs, and investor feedback. Allocation, stabilization, short covering, greenshoe mechanics, syndicate economics, deal-file reconciliation, and settlement all matter. Registration exemptions and private-placement/resale questions require matching the authority to the offering facts and investor eligibility.

• Confusing preliminary and final prospectus timing.

• Offering-stage questions: identify where you are in the transaction before choosing the document.

Domain 3 (24%) covers M&A execution, tender offers, fairness opinions, and restructuring. On sell-side transactions, think sequence and confidentiality: engagement/structure, NDA, teaser, confidential materials, buyer contact, bidding, management presentations/data room, final offers, and execution. Seller valuation should use multiple methods and consider strategic fit, buyer financing capacity, market reaction, tax, antitrust, covenants, and consideration type. Buy-side work centers on strategic rationale, valuation, synergies, financing, legal/structural impediments, and targeted due diligence before finalizing the bid. A fairness opinion evaluates the financial fairness of transaction consideration and is not just a valuation report; the source notes tie disclosure requirements to FINRA Rule 5150. Signing-to-closing requires monitoring proxy/prospectus disclosures, conditions, and external communications. Tender-offer questions focus on Schedule TO, timing, disclosure, and equal-treatment concepts. Restructuring questions turn on claim priority, collateral, debt covenants, defaults, liquidity, and whether the transaction is a Chapter 11 reorganization, Chapter 7 liquidation, or Section 363 asset sale.

• Choosing one transaction structure without considering tax, antitrust, legal, covenant, and financing consequences.

• For sell-side questions, think in sequence and protect confidentiality.